Dignity and Democracy: Escaping the Clutches of the Financial Markets

An Essay by Dirk Kurbjuweit

Part 3: Consequences: Dangers to Democracy

The skyline of Frankfurt: "Trouble is brewing all over Europe." Zoom
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The skyline of Frankfurt: "Trouble is brewing all over Europe."

The public is becoming mistrustful of politicians. Citizens feel treated unfairly when politicians fulfill the banks' wishes with billions in bailouts while ignoring the wishes of citizens. Why does the German government buy up 25 percent of ailing Commerzbank, but not 25 percent of a struggling bakery around the corner or of that other cash-strapped enterprise, the family with three children? One could say that it's because Commerzbank is so large and important to the financial system -- too big to fail -- but that doesn't alleviate our discomfort with an unfair situation.

The power of the executive in Germany, the Chancellery, is increasing at the expense of the legislative, the Bundestag. Chancellor Angela Merkel pushed the first bank bailout package through the country's two houses of parliament, the Bundestag and the Bundesrat, in only five days. The chancellor is pursuing a policy she says is "without an alternative," negotiating bailout packages with the other European Union leaders that the Bundestag is expected to rubber-stamp.

But alternatives are vital to a democracy, as is discussion, correct policy and a parliament that keeps the government in check. But all of this is lost in the constant pursuit of new bailout packages.

Worse than Ever

Yet even as governments gain power relative to national parliaments, they don't have the strength to stabilize the euro. After each meeting in Brussels, the crisis takes a small break. But then it re-emerges, worse than ever before.

One could see the whole thing as a duel between politicians and the financial markets -- but if it is, the politicians aren't looking good.

The economy has all the advantages. Financial companies are not obligated to serve the general good. They are under no pressure to legitimize their actions, they operate in a secretive way, and they pursue a clear goal that they are wildly determined to achieve: high yields.

Politics, by contrast, particularly on the European level, is cumbersome. National leaders must legitimize their actions and reconcile conflicting interests and goals, and they must do so under the watchful eye of the public. They grapple doggedly over the euro, and sometimes things get ugly. But they are almost never successful.

Besides, democracy is based on the word. Without free speech and the open exchange of views and ideas, democracy is impossible. Secrecy is the domain of authoritarian states. But at the moment, European politicians cannot speak openly about one of their most important issues, the euro. All it takes is a few words uttered by a finance minister for the banks to react with the extreme sensitivity. They immediately shift billions in assets, often to the detriment of entire nations. Words have become expensive, and that makes them dangerous.

Seeking Refuge in Lies

As a result, politicians are watching what they say. Pretty much everyone recognizes that it would be fair to involve the banks in the rehabilitation of Greece. But hardly any politicians dare to pursue such a course with any consistency.

The banks and investment firms now play the role once held by the gods. Hardly anyone dares to criticize them, and fear of their wrath guides the behavior of politicians. Many are reluctant to speak frankly, while others seek refuge in lies.

Under such conditions, democracy has lost its dignity. And that is dangerous. The foundation of any dictatorship is the tacit or open threat of violence against citizens. Their fear supports the system. The basis of democracy is respect among citizens. Their approval supports the system. If this approval disappears, democracy crumbles.

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Graphic: Greek Debt Zoom
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Graphic: Greek Debt

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